Sessional_Paper_1939 — Page 97

93

system of import duties. We were informed that the possibility of a tax on salt had been considered previously, largely as a measure to assist the Chinese Salt Administration in controlling smuggling. The conclusion then reached, with which we concur, was that it was not worth while as a revenue measure, having regard to the cost of collection and the nature of its incidence on the poorer classes of the Colony.

Surcharge on Rates.

(b) We considered the charging of a "super" rate on domestic premises of more than a certain annual value, as a method of directing an increase of taxation towards the wealthier members of the community. Such a scheme would have the theoretical advantage of representing an approximate income tax, on the assumption that the value of a man's residence varies with his income. This assumption, however, is only very roughly true, since wealthy persons frequently live in modest dwellings. An obvious method of evasion by means of the sub-division of dwelling houses presents a further dis- advantage. We considered approximate figures and finally agreed that, in view of the small addition to revenue likely to be secured in practice, the imposition was not worth the general irritation it would cause.

Internal Letter Rate,

(c) We considered the question of raising the internal letter rate from 4 cents to 5 cents. The Postmaster General submitted a memorandum on the subject which caused us to reject this possibility, though we believe that an attempt to increase the already considerable profit shewn by the Post Office is not, in general, undesirable.

Marine Surveying Fees.

(d) We observed that the Government Marine Surveyor's fees were low as compared with the fees for similar services charged by private firms. Since the former, however, are based on Board of Trade Standards, we cannot advise any adjustment locally.

Motor Licences.

(e) We are unable to recommend an increase in the taxation of motor vehicles generally. The purchase of motor-cars should not be impeded. The appropriate increase in this sphere, if increase be indicated, should rest on motor spirit rather than on the vehicle: the effect of this on the owner being a more economical use of the vehicle which he is not discouraged from buying.

Death Duties.

(f) Any further revenue under this head should be obtained by an increase in the rates of Estate Duty rather than by the introduction of other methods of taxing property on death, e.g. Legacy or Succession Duties; but we consider the present rates, which were fairly recently increased to a maximum of 20%, high enough in the circumstances of Hong Kong, where the much higher rates prevailing in, e.g., the United Kingdom would add greatly to the incentive to evasion.

Business Licences.

(g) A general system of business licences was rejected because of the difficulties of collection, the hindrance it would present to freedom of trade and the unequal incidence of any flat-rate imposition of that kind.

Passenger Landing Fee.

(h) A passenger landing fee would bring in an immediate revenue but was rejected because it would be an irritation to visitors and tourists and would curtail the freedom of movement which is at present one of the attractions of the port.